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Scale Implosion
Though the public hasn't groked it yet, WalMart and its kindred malignant organisms have entered their own yeast-overgrowth death spiral. In a now permanently contracting economy the big box model fails spectacularly. Every element of economic reality is now poised to squash them. Diesel fuel prices are heading well north of $4 again. If they push toward $5 this year you can say goodbye to the "warehouse on wheels" distribution method. (The truckers, who are mostly independent contractors, can say hello to the re-po men come to take possession of their mortgaged rigs.) Global currency wars (competitive devaluations) are about to destroy trade relationships. Say goodbye to the 12,000 mile supply chain from Guangzhou to Hackensack. Say goodbye to the growth financing model in which it becomes necessary to open dozens of new stores every year to keep the credit revolving.

Then there is the matter of the American customers themselves. The WalMart shoppers are exactly the demographic that is getting squashed in the contraction of this phony-baloney corporate buccaneer parasite revolving credit crony capital economy. Unlike the Federal Reserve, WalMart shoppers can't print their own money, and they can't bundle their MasterCard and Visa debts into CDOs to be fobbed off on Scandinavian pension funds for quick profits. They have only one real choice: buy less stuff, especially the stuff of leisure, comfort, and convenience.

he potential for all sorts of economic hardship is obvious in this burgeoning dynamic. But the coming implosion of big box retail implies tremendous opportunities for young people to make a livelihood in the imperative rebuilding of local economies. At this stage it is probably discouraging for them, because all their life programming has conditioned them to be hostages of giant corporations and so to feel helpless. In a town like the old factory village I live in (population 2500) few of the few remaining young adults might venture to open a retail operation in one of the dozen-odd vacant storefronts on Main Street. The presence of K-Mart, Tractor Supply, and Radio Shack a quarter mile west in the strip mall would seem to mock their dim inklings that something is in the wind. But K-Mart will close over 200 boxes this year, and Radio Shack is committed to shutter around 500 stores. They could be gone in this town well before Santa Claus starts checking his lists. If they go down, opportunities will blossom. There will be no new chain store brands to replace the dying ones. That phase of our history is over.

What we're on the brink of is scale implosion. Everything gigantic in American life is about to get smaller or die. Everything that we do to support economic activities at gigantic scale is going to hamper our journey into the new reality. The campaign to sustain the unsustainable, which is the official policy of US leadership, will only produce deeper whirls of entropy. I hope young people recognize this and can marshal their enthusiasm to get to work. It's already happening in the local farming scene; now it needs to happen in a commercial economy that will support local agriculture.

I agree 100%.

I see this locally, where "the best and the brightest" of our college students are going into sustainable ag, permaculture, and DIY of all sorts. We oldsters -- speak for yourself, lambert -- need to connect to them. Because to support a culture of local risk-taking, two systems at scale that should not die are Social Security, and Medicare, which should become Medicare for All. We, knowing we are mortal, know this. Young people, believing them are not immortal, may not. We should unite, if we can figure out how.

I think I'm just generally skeptical about this sort of thinking. Yes, WalMart and its kin are bound to meet the end of their string here, and sooner rather than later. Still, there's still lots of room for Le WalMart or Das WalMart or Walmartaru, etc. Plenty of nations out there who are just about as stupid as we are when it comes to letting big corporations buy their governments so they can move in.

So, much as I'd like to see many of them go the way of Blockbuster or IGA, I just don't see it happening anytime soon without some help.

And to tell you the truth, I kinda miss Borders. Now there's only one bookstore in this town, and that's nowhere near enough.

I'm glad i live in a place not utterly dominated by big box stores yet. We have some (a WalMart, Target, Kohls, and Best Buy as well as TJMaxx opened up in the last two years), but we also still have a downtown that's occupied and holdouts from the days when regional chains were more common.

Unfortunately, if most people can't afford WalMart's low prices, they're unlikely to be able to afford the start up retailer either. So i guess the trick is to find a way that invigorates local economies enough to sustain themselves, and of course a start would be to spend our money carefully. That means generally not at those big box stores. I assume that's awful difficult when you're really having a hard time making ends meet in the first place.

Diesel going too high will kill America's zombie economy, because trucking everything around the continent is the most short-sighted and stupid thing we could possibly have done. (And it severely accelerates the degradation of road surfaces.) Bigger container ships make sense because you won't use significantly more bunker fuel to push a bigger ship than a slightly smaller one. For the weight/volume of goods they carry, container ships are incredibly efficient. Like trains, minimal fuel moves a lot of stuff great distances. Even diesel-electrics are incredibly efficient when calculated in fuel/weight/mile; making them longer likely has a negligible effect on fuel efficiency.

Of course had we been smart, the long distance hauling of goods around the country would have always been done by rail, with trucks used to transport from rail head to final destination.

Sadly, I live in a city of 80,000-plus that has very few independent retailers. In fact, we have two WalMarts.

And no, we're not out in the middle of nowhere.

That thing about affordability is a problem. I think partly it can be solved by making people who can afford the alternatives aware of them. Beyond that, I'm not sure what the answer is. Some people spend their money inefficiently, but I don't think there's as much growth room there among the poor as some folks seem to.

First it was the mega-malls. Now finally Bog Box outlets. Global trade is unsustainable. It's like one giant sheet of concrete road. One crack and it crumbles. But economies paved like cobblestones together made up of 1000's of small, niche industries such as Germany are doing well. If one fails, it doesn't blow out the next.

I would expect the big boxes to adapt to more expensive diesel by switching to more natural gas trucks (whether owned or contracted). A company named Clean Energy (backed by T. Boone Pickens) is developing a network of compressed nat.gas filling stations. Cummins, working with Westport Innovations, is putting out natual gas truck engines. And there are others going this way. High diesel prices only help them.

As Lex says, it also makes sense to use the railroads a lot more, As price pressure increases, I would expect the rail system to get more efficient, not just in tons moved per mile per gallon, but also in consolidating loads onto trains and then distributing loads from trains. They could also switch to compressed natual gas as a fuel.

Where I do see a possible opening for smaller retailers, is in a linkage with a big box scale wholesaler. Product identification (bar codes and the like), instantanious data communication for submitting orders, materials handling technology putting together orders, and efficient transportation with natual gas and hybrid delivery vehicles could allow small retailers to get wholesale goods at competitive prices. As it is now, the small retailers wholesale prices are above or so close to big box retail prices, that it is hard to compete. If the big box cannot significantly undercut the local retailers, there is no reason to open or keep open the box.

You could be right in the short term (and in the long run we are all dead...)

I can see two networks that might help the small retailer: You mention barcoding, so open source that; and open source credit. The cut the rentiers take from plastic is unconscionable. Don't know how to get there, though.

* * *

However, I'm not sure you're right, at least universally. Going purely on anecdote, the tide of goods available on the shelves is slowly, slowly receding, at least for places on the periphery like ME or MI (and for all I know in "the heartland." At the Mall, the two "anchor tenants" are Sears and Macy's. The white goods are Sears are increasingly shoddy -- the little oil heater I bought three years ago had a handle I could pick it up with; this year's model had no handle and I had to screw the wheels on. So now, to move it, I have to find the unheated portion of the heater and push... That's pressure on margins. The next step is to close the store. Ditto Macy's, which actually has sales on already discounted goods.

So, while you point to ways that the supply chain can be made more efficient, I am saying that the supply chain will gradually be withdrawn from portions of the country -- perhaps even large portions. Leaving the optimistic scenario for young people in the post!

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

Might be a little tougher, but a good idea. Do cards from credit unions count? Or are you referring to some aspect of the technology?

If it's the latter, then I suspect there's a way to make it work. How our government handles cryptography might be an example. Even though it guards the information, it assumes that how the cryptography works might fall into the hands of an enemy. What it tries to keep really secret is the keys it uses to encrypt information. Conceivably, the encryption schemes our government uses could be made open source, but as long as the keys are kept secret, the secrets they're protection are still secure.

How soon we forget. Just because we may all hate Wal-Mart doesn't mean our parents and grandparents didn't hate the heel who ran the company store. I remember high prices, poor service, and outright contempt from local merchants. Even in the face of Wal Mart, their relationship to the community never changed, even as their businesses closed up. Thousands of loveless beady-eyed Ebeneezer Scrooge-like local chamber of commerce types who piped in Paul Harvey broadcasts over the pa system and knew when they had you over a barrel--charging five dollars for a needle and twenty dollars for thread. Don't you remember the type?

As for the kids, I'm thinking that as we produce less and less, our adaptation will be more like Cuba's, relying on jobs that can't be transported anywhere else. Just as Havana still has '55 Ford Fairlanes ingeniously held together with baling wire and chewing gum, I suspect the kids will be getting very good at shoe repair, refurbishing electric motors to nurse 1980s-era Maytags along, and Victory gardens everywhere. I see a lot of opportunities for small machinist shops doing one-offs. No money to buy new anything, domestic or imported, but resources shifted to maintaining what we already have. A lot of hungry young men. Given the right circumstances the powers that be might think them fit for cannon fodder.

There are a lot of crafty types, "makers," but their current interests and offerings seem to me whimsical. I hope they are able to adapt their hobbies to practical products and solutions that will be valuable to their neighbors during precipitously declining economic conditions.

Just because we may all hate Wal-Mart doesn't mean our parents and grandparents didn't hate the heel who ran the company store. I remember high prices, poor service, and outright contempt from local merchants.

My argument has less to do with the niceness of the folks who ran the independent stores, but with the concentration of power and wealth that stores like WalMart represent, and the utter lack of alternatives thanks to them killing off the local businesses. Independent store owners could be scrooges, especially when they could get away with it due to market conditions, but now we've replaced those individual scrooges with a few big ones, with little if any alternatives.

Independent retail businesses aren't a utopia, that's for certain. Retail is a tough business, with the margins typically low and worker satisfaction almost guaranteed to be low as well. Still, there are reasons to prefer them over the big boxes.

The first commenterr, Celsius 233, thinks Ian is saying that Americans need to go abroad for work (one option), and says it's sad that so many Americans feel they can't emigrate or don't want to.

But I think Ian is mostly musing that really smart entrepreneurs would do well to look at all the unemployed research scientitsts in the US, for one example, and begin start ups to develop and sell necessary medicines at fair prices. Workable? I don't know. Basic research is not cheap, nor it the testing required to get new drugs certified.

Anyway, Ian's post seems to fit with this post.

Speaking of WalMart strategies: Out in WI where I was visting, they're really, really pushing into groceries, trying to undercut on some prices, but mostly just saving busy parents one extra stop. Even when cutting out other purchases, people still need to eat.

WalMart expanded the store closest to my brother's, but all of the added space went to groceries. The other departments have been squeezed and the choices drastically narrowed, especially in clothing. And the quality seems markedly lower in several departments. (I'd noticed the same thing, but without the big grocery selection at a couple WalMart's near me in nothern NJ suboonia).

Amazingly, KMart seems to now have higher quality in several of its departments! The exclamation point is because it had been on a steep downward slide, it had seemed to me. When Sears bought KMart, they made the one near me into something like Sears Lite, which did not do well at all. Sears also dropped Martha Stewart items and didn't provide anything similar. I can't even recall how long ago that was. But, in the past year --two-ish-- Sears turned the former KMart location back into a KMart; however, it took me a long time to even re-enter the store.

I've read articles that state China is now getting orders from US retailers for lower price point items and having trouble making profits unless they get the work done in lower labor cost countries.

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